How to File a Tax Extension
April 18 is Tax Day, the deadline to file your taxes for 2022, and it has a habit of sneaking up on independent workers. If you don’t start filing your taxes in time to finish them, it might be time to consider filing for an extension.
Sometimes you just need more time, and that’s what extensions are for. Whether you still need to gather your documents or are still looking for deductions that can save you lots of money, filing for an extension might be the right choice for you.
Now you’re probably wondering what steps you need to follow to file for an extension. The good news is that getting an extension isn’t as hard as it sounds. However, keep in mind that you still need to pay the taxes you think you’ll owe by April 18 in order to not face fines or penalties.
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How to Apply for an Extension
In order to apply for an extension, we recommend you follow these two steps:
Pay the amount of taxes you think you will owe
Apply for an extension in one of these ways:
Apply online using FreeFile on IRS.gov
Ask your tax preparer to file an extension for you
Fill out and mail Form 4868 to the IRS (see the IRS instructions for an extension)
You must complete both of these steps by the filing deadline of April 18.
What Information do I Need to File an Extension?
To file your extension, you’ll just need a few pieces of information. Make sure you have the following on hand:
Your name (and your spouse’s if you’re filing jointly)
Your Social Security number (and your spouse’s if you’re filing jointly)
An estimate of your total tax liability (what you owe) for 2022
The total of what you have already paid for the 2022 tax year (including taxes withheld from your paycheck and quarterly tax payments)
The amount you are paying when you file your extension
What if I Don’t Know How Much to Pay?
It’s usually better to overpay your taxes and get a refund later than it is to underpay and get fined. If you’re not exactly sure how much you owe but can narrow your owed tax down to a range, consider paying a little more than that.
Don’t worry, if you do end up overpaying, you’ll get back any extra in the form of a refund, usually within three weeks or less of filing your tax return.
Pro tip: To get an estimate of what you owe, you can use tax software like TurboTax® to determine roughly how much you owe, but stop short of filing. Even if you haven’t found all your deductions yet, put in as much information as you can, and use TurboTax’s estimate to pay what you think you’ll owe. When you are ready to finish filing your taxes, all the work you’ve already done will be saved for you.
Stride members can get 25 percent off federal filing with TurboTax® Self-Employed products. If you’re not already a member, you can sign up now to get your savings. If you’re already a member, sign in.
Is Getting an Extension Free?
Yes!
You can file for an extension for free, but you still have to send in payment for how much you think you’ll owe by the tax deadline.
How Much Time Does an Extension Give Me?
An extension will grant you six more months to file your return.
This means you will have until October 16, 2023 to gather up your documents, calculate deductions, and find proof of them.
What if I Can’t Pay What I Owe?
When it comes to taxes, it is to your advantage to pay as much as you can as soon as possible; this will reduce the penalties and interest you owe over time. If you have remaining penalties and taxes that you cannot currently afford, you can:
Request a payment extension: You can use Form 1127 to request an extension on your tax payments. You need to prove that paying your taxes would cause you undue hardship. Pro tip: Form 1127 needs to be filed by April 18 just like your filing extension.
Apply online for a monthly payment plan. The IRS offers short- and long-term payment plans that you can apply for online. They charge a small setup fee to get started, and you will still owe late penalties.
Pay what you owe by credit card. If you have a low-interest credit card, this option is one way to reduce the penalties and fees you owe the IRS. However, if you have a high-interest credit card, stick to the IRS’s lower rates as you work to pay off your debt.
Many people choose to pay their liability with a credit card using IRS-approved services like PayTaxUSA, Official Payments, or Pay1040.com. These services typically charge a fee for using a card.
Apply for an offer in compromise (OIC): An OIC negotiates your debt with the IRS to a lower rate. This option should be considered as a last resort as it is similar to bankruptcy and requires you to offer up your net worth. OIC applications are typically only accepted when the tax you owe is greater than your Reasonable Collection Potential, a measurement that determines your ability to pay taxes. To qualify for an OIC, you need to have filed all your returns.
Remember — you’re not alone! A lot of folks are surprised to owe more than they expected.
What if I Just File and Pay Late?
This is not something we recommend because you will definitely end up paying more than what you owe with added penalties. Even if you can’t afford to pay what you owe right now, by filing for an extension (instead of just filing late), you will be able to avoid a hefty penalty.
That’s because of the failure-to-file penalty, which charges you for not filing your return on time. This is a 4.5 percent late fee (plus interest) for each month your return is late. The fee applies to the tax that remains unpaid after the deadline. This penalty maxes out at 22.5 percent after five months.
If after 60 days you still have not submitted your return, the minimum penalty will be either $210 or 100% of the tax you owe (whichever is smaller).
However, by filing for an extension, you can avoid being hit with the failure-to-file penalty even if you haven’t paid all of your taxes owed. Keep in mind: you still will be charged the lesser of the two penalties, which is the failure-to-pay penalty. The failure-to-pay penalty is charged regardless of filing for an extension or not if you haven’t paid the taxes you owe. It is a 0.5 percent late fee for each month your return is late. This penalty accrues until your tax is paid, up to 25 percent of your total owed tax.
Pro tip: It’s better to file and pay something even if you haven’t applied for an extension. You can amend your return in the future and also pay the rest of what you owe. This will lower penalties (especially the late filing penalty which is 10 times higher than the late payment penalty).
Expecting a Refund?
If you don’t owe any taxes, there are no penalties for filing or paying late for up to three years.
Pro tip: Don’t miss out on a potential refund. If you file your tax return more than three years late, you’re disqualified from receiving any refund at all.
Save Time and Avoid Filing Late
Often, the most time-consuming part of filing your taxes is trying to calculate your business expenses and finding old receipts.
You can save time filing your taxes if you keep track of your expenses all year round with the Stride app. Plus, it’ll help you find deductions you might not have thought of. Download the app now to help make next year’s taxes faster and easier!
Disclaimer: The information contained in this Guide is not offered as legal or tax advice. The U.S. federal income tax discussion included in this Guide is for general information purposes only and is not a complete analysis or discussion of all potential tax consequences that may be relevant to a particular individual. In light of the foregoing, each individual should consult with and seek advice from such individual’s own tax advisor with respect to the tax consequences discussed herein. Any information contained in this Guide is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the U.S. Internal Revenue Code of 1986, as amended.
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